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TMI Blog2010 (11) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... HC in the computation of book profit under s. 115JB of the IT Act. Even though in respect of one assessee, the provision involved is s. 115JA, there is no need to consider the issue separately because applicability of s. 80HHC in the computation of book profit is one and the same both under ss. 115JA and 115JB of the Act. 2. When huge amount of carried forward business loss and unabsorbed depreciation were set off by the assessees, the gross profit became a negative figure. Therefore the assessees were not entitled to deduction under s. 80HHC of the Act by virtue of operation of ss. 80AB and 80B(5) of the Act. However, the AO proceeded to make assessment on book profit under s. 115JB of the Act. In the computation of book profit, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by this judgment of the Supreme Court in their favour, standing counsel for the Revenue contended all what the Supreme Court has said is that ceiling of deduction provided under s. 80HHC(1B) at 80 per cent should not be applied in the computation of book profit and assessees are entitled to deduction of the entire eligible export profit computed under s. 80HHC of the Act. In other words, standing counsel contended that in the computation of book profit, deduction under s. 80HHC should be considered by applying the provisions of s. 80AB and s. 80B(5), etc., of the Act. Therefore according to him, if the total income computed before considering the claim of deduction under Chapter VIA-C is a negative figure then the assessees shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable by the assessee on such total income shall be the amount of income-tax at the rate of seven and one-half per cent. (2) Every assessee, being a company, shall for the purposes of this section, prepare its P and L a/c for the relevant previous year in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956(1 of 1956):- Provided that while preparing the annual accounts including P and L a/c,- (i) the accounting policies; (ii) the Accounting Standards followed for preparing such accounts including P and L a/c; (iii) the method and rates adopted for calculating the depreciation, ............ Explanation:- For the purposes of this section, 'book prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,- Explanation:- For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation, is nil, or (iv) the amount of profits eligible for deduction under s. 80HHC, computed under cl. (a) or cl. (b) or cl. (c) of sub-s. (3) or sub-s. (3A) as the case may be, of that section, and subject to the conditions specified in that section; or, (v) the amount of profits eligible for deduction under s. 80HHE computed under sub-s. (3) or sub-s. (3A), as the case may be, of that section, and subject to the conditions specified in that section; or (vi) the amount of profits eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Ajanta Pharma Ltd.'s case (supra) wherein the Supreme Court has held that s. 115JB is a self-contained code in the computation of book profit. Assessees' counsel has also relied on the decision of the Madras High Court in CIT vs. Magna Electro Castings Ltd. (2009) 184 Taxman 79 (Mad) and the earlier decision of this Court in G.T.N. Textiles's case (supra) referred above and submitted that restrictions in the computation of deduction under Chapter VIA-C which includes deduction of export profit under s. 80HHC cannot be subject to the provisions of s. 80AB or s. 80B(5) of the Act. The further contention canvassed by assessees' counsel is that export profit has to be determined with reference to the profit available in the P and L a/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of assessment and what is clear from cl. (iv) above is that even in the alternative scheme of assessment under s. 115JB assessee is entitled to deduction of export profit under s. 80HHC. In other words, export profit eligible for deduction under s. 80HHC is allowable under both the schemes of assessment. So much so, assessees are certainly entitled to deduction under s. 80HHC but it is only by following the method provided under sub-ss. (3) and (3A) of s. 80HHC. However, by virtue of the decision of the Supreme Court above-referred, we feel the restriction contained in s. 80AB or s. 80B(5) could not be applied in as much as carry forward of business loss or depreciation should not be first set off leaving gross total income nil, which d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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